Observers call for Town Councils Act to have more bite

National Development Minister Khaw Boon Wan speaks during an interview in Singapore, on Dec 20, 2010. Observers speaking to The Business Times ahead of Thursday's Parliament sitting have recommended that clear and strong penalties be spelt out if the Town Councils Act is to have any teeth.

OBSERVERS speaking to The Business Times ahead of Thursday's Parliament sitting have recommended that clear and strong penalties be spelt out if the Town Councils Act is to have any teeth.

They have criticised the existing Act as being "without bite", in that it lays out a myriad of rules which town councils are supposed to comply with, but is mostly largely silent when it comes to enforcement and penalties for non-compliance.

At tomorrow's session in the House, National Development Minister Khaw Boon Wan will speak on the need to beef up the legislative framework for town councils so that those in charge can be held accountable.

A copy of the motion obtained by The Business Times from the Ministry of National Development (MND) indicates that he will also call on lawmakers to "note with concern" the major lapses found in the Auditor-General's Office (AGO) audit of the Aljunied-Hougang-Punggol East Town Council (AHPETC).

The opposition Workers' Party (WP), which runs AHPETC, had said on Monday that it will respond to the audit report in Parliament.

In the lead-up to the highly-anticipated Parliament session, observers such as Lan Luh Luh, associate professor at the National University of Singapore (NUS) Business School and Faculty of Law, have noted that the main problem with the Act is that it does not say what happens if there is negligence or a failure to comply: "There's not much accountability ... Probably the so-called punishing or disciplinary action will come only at the elections - if you don't do well, you get elected out - but by that time, it may be a bit dangerous because the accounts wouldn't have been properly kept for awhile."

As it stands, only three offences attract fines under the Town Councils Act: the wilful withholding of information from an auditor, the misuse of council funds and contraventions of the rules of the lift-upgrading programme. The first offence attracts a fine of up to S$1,000; the other two offences have maximum fines of S$5,000.

But the Act is silent on sanctions for other lapses. For example, MND cannot compel town councils to submit information - such as arrears reports - in full and on time, and no penalty is imposed on a town council that fails to do this.

In extreme cases, however, the minister may appoint a person to step in when a town council has failed to keep the common property clean, in good and serviceable shape or in a condition that does not endanger residents' health or safety.

But because observers do not think the situation at AHPETC has reached such a dire point, they ask what can be done in such cases, where the threshold for intervention has not yet been hit.

Corporate governance advocates such as NUS Business School associate professor Mak Yuen Teen say clearer and stronger penalties for non-compliance is only half the equation; the independence of the enforcement body must be scrutinised too.

"We currently have a convoluted governance arrangement (for) town councils. With MND supervising the town councils, it's a bit like how people say the SGX (Singapore Exchange) has a conflict of interest in regulating listed companies ... If we do strengthen the legislative framework (of the Town Councils Act), the independence of enforcement becomes very important."

Prof Lan agreed: "I don't think passing (a more stringent) Act is very difficult - the difficulty is in finding a legitimate, independent body to control the town councils. Which organ should oversee the town council because of its political nature? If it's any ministry, it would be a bit odd because (these are helmed) by the ruling party. I think that's the key thing that has to be resolved."

Both Prof Mak and Prof Lan would like to see the AGO conduct periodic audits of all town councils - like how it already checks the books of government ministries and statutory boards.

Because political dynamics are at play, Singapore Management University law professor Eugene Tan said any review of the Town Councils Act would not be "a pure legislative exercise", even if the intent is to ensure that residents' best interests are always safeguarded: "It will have to interrogate the fundamental basics of what town councils are about - right now, they're not just your municipal estate offices, they also reflect the MP's leadership in the running of a public housing estate."